Absa trials payments via mobile phone

Banking group Absa conducted South Africa’s first live user trial of Near Field Communication (NFC) technology on mobile phones in December, with 500 of the bank’s staff members using the technology in a commercial environment.

The bank partnered with global financial services provider Mastercard to embed the Paypass Tap and Go payment chip on cellular handsets for the trial, enabling participants to load funds onto their phones through the Absa website or ATMs.

They can then pay for goods or services by merely holding their phone in front of a NFC-enabled pay point, with the value of the transaction being instantly debited from their stored value.

The trial enabled participants to pay for goods at coffee shops, canteens, and later, at other service providers that are located at Absa’s head office buildings in central Johannesburg.

“Absa is the first institution in South Africa to bring Near Field Communication capabilities with an EMV (Europay, Mastercard and Visa) card payment application to a handset,” said Absa retail markets head Arrie Rautenbach in a statement last month.

Paving the way for consumer utilisation

Rautenbach explained that the trial paved the way for consumer market utilisation of the mobile phone as a payment device using revolutionary NFC technology.

“While this trial will facilitate low value payments in retail and transit in early stages, we envision many more exciting new forms of mobile payment in the future,” he said.

The mobile payment system also contains the National Department of Transport data structure which will, in future, facilitate more advanced payments in transit.

The application on the phone will store details of the commuter, the day and time, where they entered and exited the transit system – and use this information to calculate the fares.

From the customer’s perspective, the benefits of NFC will include faster transactions, shorter queues, increased levels of security and the ability to electronically track their spending habits.

Trial to provide key insights

Research In Motion’s Blackberry phones were used as the initial handset for mobile payment trials. The Blackberry devices are equipped with an NFC wireless chip, making it well-suited for mobile payments.

All payment and NFC services that are available on the handset can then be accessed from the mobile phone’s main menu, in addition to information about services available, and customer support.

“This trial is going to provide key insights which will prove crucial to refining the customer experience as we bring NFC on mobile to market,” said Absa Digital Banking deputy managing executive Adrian Vermooten. “In time to come, consumers will store any type of payment cards in their mobile wallet on their handsets, and either pay online by tapping the phone on a merchant’s reader or on a person-to-person basis.

“This new technology is paving the way and building acceptance networks for mobile payments in future.”

Close cooperation required

Absa has worked extensively over the past few years with its global parent company Barclays, through its card division Barclaycard, who are among the global leaders in contactless and this form of mobile payment.

“Our relationship with Barclaycard has provided our Absa team with both the inspiration and the expertise that is necessary to make this new payment form a reality,” said Rautenbach.

He added that international experience and various research papers showed that for close cooperation of major players in the “NFC ecosystem” such as banks, network operators, retailers, cellular handset manufacturers and information technology partners was required for NFC to become a reality.

“As we learn from the practical, hands-on experiences of the trial, we will continue our discussions and deepen our relationships with the major players in the ‘NFC ecosystem’ to develop the commercial models, and extend the variety of payments instruments made available by the wallet.”